The hidden cost of re-keying data between systems

A simple way to calculate it

Use your own numbers. First, the time:

Time cost = minutes per entry × entries per day × working days × hourly cost of the person doing it

Then add the cost of mistakes:

Error cost = entries per year × error rate × average cost to fix one

Use the full cost of the person (salary plus the usual employer costs), not just the wage. If several people do the same task, add them together.

A worked example

Illustrative example with made-up figures: A business receives 40 web and marketplace orders a day, and each one takes 3 minutes to copy into the order system. That is 120 minutes, or 2 hours, a day. Over 250 working days it comes to 500 hours a year. At a full cost of £20 an hour, that is £10,000 a year for typing alone.

Now the mistakes. If 1 order in 50 contains an error (a wrong address, a missed line), that is 200 errors a year across 10,000 orders. If each takes 20 minutes to find and fix, plus the cost of a re-sent parcel or an unhappy customer, the total is easily another few thousand pounds.

Your own figures will differ, but the method shows how a task that "only takes a couple of minutes" becomes a significant annual cost.

The costs you cannot easily count

• Delays. Orders and invoices wait for someone to get to them, which slows cash and customer service.
• Customer impact. Wrong addresses, wrong stock levels and wrong prices damage trust.
• Frustration. Skilled people spending their day typing the same thing twice are not doing the work you hired them for.
• Limits on growth. Every new order channel adds more typing, so growth means more admin staff, not more profit.
• Single points of failure. If the person who does the typing is away, the process stops.

Where it usually hides

• Orders from a website or marketplace entered into the main system.
• Purchase orders and invoices moving between finance and operations.
• Stock and price updates sent to online channels by hand.
• Customer details copied between sales, support and marketing tools.
• Delivery and tracking information copied back to customers or to the order record.

How to spot it in your own business

1. Ask each team: "What do you copy from one place to another?"
2. Watch a normal hour of work rather than relying on descriptions.
3. List the tasks, how often they happen and how long they take.
4. Run the formula on the top three.

What to do about it

Connect the systems so data is entered once and flows automatically. Start with the single largest source of re-keying, prove the saving, then move to the next. Most businesses see the payback from the first connection help to fund the second.

You do not need to connect everything. A rule of thumb is to compare the annual cost of the manual task with the one-off cost of automating it, plus a modest support cost. Where the manual cost is higher within a year or two, it is worth doing.

Making the numbers useful

Having a figure helps in two ways. It tells you how much a connection is worth to you, which makes quotes easy to judge (see how much it costs to connect two business systems). It also helps you prioritise, so you fix the most expensive problem first rather than the most visible one.

If you would like help working it out, a free 30-minute call is a good place to start.

Common questions